2024 (11) TMI 215 - AT - Customs

Valuation for rough diamonds - discrepancy between the declared value and the reassessed value by the customs authorities - Additional detriment of absolute confiscation - exacerbating the option to redemption of confiscated goods along with others fastened on to them in proceedings arising from alleged overinvoicing of three lots of rough diamonds from among the seven lots imported against bill of entry - confiscation of goods that could be re-exported only by redemption on payment of ₹ 10,00,000 along with penalty of ₹ 20,00,000 under section 112 of Customs Act, 1962 -. According to Learned Counsel for appellant, they had not been put on notice of intent to convert conditional confiscation into absolute along with change of the cause for confiscation under section 111 of Customs Act, 1962. HELD THAT - The first appellate authority enhanced the gravitas of confiscation but that is, by no stretch, in violation of principles of natural justice nor in breach of procedure set out in section 128A of Customs Act, 1962. The stipulation therein is contingent upon absence of prior notice and operates with the presumption that appeal of jurisdictional authorities would be triggered by dropping of proceedings which leaves such enjoinment to be complied with only in the event of such intent on the part of first appellate authority in appeal of assessee; indeed, with foregoing of right to be issued with notice before adjudication by the original authority, it is moot if the first appellate was even required to entertain this particular plea. The proposal of the appellant-Commissioner for reversal of the redemption of impugned goods cannot be said to be anything but notice of potential outcome for undoing the unalloyed contents of the order appealed against. We are unable to fathom the cause for such appropriation or even a proposal for securing that end. The Customs Act, 1962 does not prescribe destruction of confiscated goods which is an executive decision and confiscation does not, of itself, assure destruction. There is, thus, every possibility of conflict diamonds ending up in the domestic market which is, doubtlessly, not contrary to law but that they these were transported across the border and hence carrying the taint of conflict diamonds in which the Central Government would be forced as an accessory by committee constituted under section 129D of Customs Act, 1962 does not appear to have weighed with the reviewing authority. It would have been most appropriate for the goods to be repatriated to country of despatch and to be dealt with in the manner appropriate to the laws of that country than that national commitment to ban on international trade in conflict diamonds be called into question by consequence of absolute confiscation. In any case, the lack of match in the certificate is not a ground for absolute confiscation of the impugned goods. It would have been appropriate for checks to be carried out with the authority concerned instead of adopting such precipitate action. The absolute confiscation is, therefore, set aside. The original authority had confiscated the goods under section 111(m) of Customs Act, 1962 which comes into play for misdeclaration of particulars in the bill of entry. Valuation of imported goods, in accordance with section 14 of Customs Act, 1962 and with rule 3(4) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, is, doubtlessly, an approximation of its worth but is sanctified when determined in compliance of the statutory procedure; it is only upon the appropriateness of the method adopted or preceding procedure that re-determination may be challenged. The importer had foregone the opportunity to be placed on notice before substitution of the value and, hence cannot cry foul upon finding rendered. At best, only the computation becomes challengeable. There is nothing on record to indicate such challenge. In order that the consequence of misdeclared value is fairly, and only if due, visited on imports and importer as well as others, we set aside the impugned order for re-determination of value only to the extent permitted by rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The goods are not liable to be confiscated absolutely and even such confiscation, as is intended to be undertaken and subject to redemption on payment of fine, should limit itself to that portion of the goods that were misdeclared with the rest of the goods eligible for clearance for home consumption. The appeals are allowed by way of remand

Summary

Issues: Valuation of imported goods, conversion of confiscation to absolute, mismatch in Kimberley Process Certificate, procedural fairness, application of Customs Act, 1962

Valuation of Imported Goods:
The appeal involved a dispute regarding the valuation of imported rough diamonds, specifically focusing on the discrepancy between the declared value and the reassessed value by the customs authorities. The original authority re-determined the assessable value of three lots of rough diamonds, leading to an appeal against the additional detriment imposed by the customs authorities. The issue revolved around the compliance with the Customs Valuation Rules and the methodology used for determining the value of the imported goods.

Conversion of Confiscation to Absolute:
Another key issue in the judgment was the conversion of confiscation to absolute without the option of redemption for the confiscated goods. The appeal challenged this conversion, arguing that the appellant had not been adequately notified of the intent to change the confiscation status. The decision to convert the confiscation was based on the alleged overinvoicing of the imported rough diamonds, leading to additional detriments imposed by the customs authorities.

Mismatch in Kimberley Process Certificate:
The judgment also addressed the mismatch in the Kimberley Process Certificate (KPC) submitted for the imported goods, specifically highlighting the discrepancy in details between the certificate and the actual consignment. The KPC is intended to monitor the trade and prevent the circulation of conflict diamonds, raising concerns about the accuracy and compliance with the monitoring requirements.

Procedural Fairness:
The issue of procedural fairness was raised concerning the lack of notice provided to the appellant before the conversion of confiscation to absolute. The appellant argued that the circular issued by the Central Board of Indirect Taxes & Customs mandated certain procedures, including the tallying of weight for the KPC monitoring. The judgment analyzed whether the procedures followed by the customs authorities were in line with the principles of natural justice and statutory requirements.

Application of Customs Act, 1962:
The judgment delved into the application of the Customs Act, 1962, particularly focusing on the provisions related to the misdeclaration of particulars in the bill of entry and the valuation of imported goods. The decision examined the authority of the customs officials to confiscate goods under specific sections of the Customs Act and the adherence to statutory procedures for valuation and confiscation.

Overall, the judgment provided a detailed analysis of each issue raised in the appeal, considering the legal framework, procedural requirements, and factual circumstances surrounding the importation and valuation of rough diamonds. The decision ultimately allowed the appeals by remanding the case for re-determination of the value of the imported goods, emphasizing the importance of procedural fairness and compliance with the Customs Valuation Rules.